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POSTAL SERVICE

Veterans Affairs Department

CFR Citation: 39 CFR Parts 121 and 122

NOTICE: Part III

DOCUMENT ACTION: Final rule.

SUBJECT CATEGORY: Modern Service Standards for Market-Dominant Products

DATES: Effective date: December 19, 2007. For information on implementation, see the SUPPLEMENTARY INFORMATION section below.

DOCUMENT SUMMARY: The Postal Service^TM establishes modern service standards for its marketdominant products. Section 301 of the Postal Accountability and Enhancement Act, Public Law 109435, 120 Stat 3198 et seq. (December 20, 2006) requires the Postal Service, after consultation with the Postal Regulatory Commission (PRC), to establish by regulation within a year of its enactment, a set of modern service standards for its marketdominant products. This notice responds to that requirement by establishing the required regulations.

SUMMARY: Postal Service,

SUPPLEMENTAL INFORMATION

Within 6 months of today's date, the Postal Service, after consultation with the PRC, is required by section 302 of the Act to submit to Congress a plan that, inter alia, establishes service performance goals for its marketdominant products; describes changes to its processing, transportation, delivery and retail networks necessary to allow achievement of those goals; and describes its long term vision for rationalizing its infrastructure and workforce. Publication of these regulations today is a first step that allows the Postal Service to turn its attention to the requirements of section 302 (120 Stat. 321921). The full extent of any realignment of the postal mail processing and transportation network to achieve these standards cannot be known until the Postal Service develops the plan required by Postal Accountability and Enhancement Act (PAEA) section 302. Thus, there will be a lag between the publication of these service standards and implementation of the related operational changes necessary to support them.

Regulatory history: 72 FR 58946 (October 17, 2007).

The remainder of this notice is divided into four sections. Section I highlights the general legal and procedural background for the establishment of marketdominant product service standard regulations. Section II summarizes and explains revisions that the Postal Service has made to the regulations proposed in its October 17, 2007, Federal Register solicitation in response to the PRC's subsequent market dominant postal products designations. Section III summarizes the Postal Service's establishment of service standards for special services that the PRC recently has designated as marketdominant, and explains corrections and clarifications to its originally proposed regulations. Section IV summarizes and discusses many of the comments received in response to the October 17, 2007, solicitation, and any resulting amendments, clarifications or corrections to the proposed regulations. Section V contains the final regulations and explains how those regulations achieve the objectives of 39 U.S.C. 3691(b)(1), and reflect consideration of the factors of 39 U.S.C. 3691(c).

I. Background

The establishment of modern service standards for marketdominant postal products is the first in a series of related mandates in sections 301 and 302 of the Postal Accountability and Enhancement Act (hereinafter, the ``PAEA'' or ``Postal Law of 2006'' or the ``Act''). Section 301 requires the Postal Service to establish modern service standards for its marketdominant products within a year of the law's December 20, 2006, enactment. Section 302 mandates that, 6 months after the establishment of those modern service standards, the Postal Service must submit to Congress a plan that reflects the establishment of performance goals and includes a description of the changes to its networks deemed necessary to meet those goals.

As codified in 39 U.S.C. 3691(a), PAEA section 301 requires the Postal Service to consult with the PRC before establishing modern service standards for its marketdominant products.\1\ The extensive service standard consultations that took place between the two agencies earlier this year are summarized at 72 FR 58948 (October 17, 2007). Based upon subsequent consultations with the PRC regarding service performance measurement under PAEA section 301 (as codified in 39 U.S.C. 3691(b)(1)(D) and (b)(2)), the Postal Service also has requested the PRC's approval of proposed systems for the measurement of service standard achievement for its marketdominant products.\2\
\1\ By operation of 39 U.S.C 410(a), the Postal Service is exempt from the notice and comment requirements of the
Administrative Procedure Act (5 U.S.C. 553(b), (c)) regarding proposed rule makings. Nevertheless, the Postal Service invited public comment on its proposed marketdominant product service standard regulations. See 72 FR 58946 et seq. (October 17, 2007). \2\ The Postal Regulatory Commission has initiated a docket to solicit public comments regarding the details of the measurement systems proposed by the Postal Service. See PRC Docket No. PI20081, Notice of Request for Comments on Service Performance Measurement Systems for Market Dominant Products (December 4, 2007) at http://www.prc.gov .
II. New Service Standard Determinations Resulting From Subsequent PRC Administrative Rulings

Under the terms of 39 U.S.C. 3621(a), 39 U.S.C. 3691(a) requires the establishment of modern service standards for the following: First Class Mail[supreg] letters and sealed parcels, FirstClass Mail cards, Periodicals, Standard Mail[supreg], SinglePiece Parcel Post[supreg], Media Mail[supreg], Bound Printed Matter, Library Mail, Special Services and Single Piece FirstClass Mail International.\3\ The Postal Service's October 17, 2007, solicitation of public comment on its proposed marketdominant product service standards reflected this list. \3\ SinglePiece Parcel Post, Media Mail, Bound Printed Matter, and Library Mail are separate under the terms of section 3621(a). The service standards for these types of mail, historically, have been the same. For as long as that remains the case, and for purposes of this notice and the service standards established below, these types of mail are collectively referred to as ``Package Services'' mail.

On November 9, 2007, the PRC clarified the marketdominant status of certain postal services. See 72 FR 63662 et seq. (November 9, 2007). The PRC's ruling designates the following as marketdominant: Inbound SinglePiece FirstClass Mail International, Inbound Surface Parcel Post (at Universal Postal Union rates), International Certificate of Mailing, International Registered Mail, International Restricted Delivery, and International Return Receipt. See 72 FR 6368285. As demonstrated below, the final marketdominant service standard regulations established today reflect the Postal Service's careful consideration of the PRC's more recent marketdominant product designations.
A. Outbound and Inbound SinglePiece FirstClass Mail International

The PRC's ruling at 72 FR 6368285 (November 9, 2007) clarified that any service standard for Outbound SinglePiece FirstClass Mail International should apply to parcelshaped pieces, and designated Inbound SinglePiece FirstClass Mail as a separate market
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dominant product. Accordingly, service standards for Outbound Single Piece FirstClass Mail International and Inbound SinglePiece International are being published in 39 CFR 121.1(f) and 39 CFR 121.1(g), respectively. Both standards contain the same day ranges and business rules as domestic FirstClass Mail in transit between the 3 digit ZIP Code\TM\ area of the designated inbound International Service Center (ISC) to the 3digit ZIP Code of the delivery address. B. Inbound Surface Parcel Post (at UPU Rates)

The PRC's ruling at 72 FR 63685 (November 9, 2007) designated Inbound Surface Parcel Post tendered at Universal Postal Union rates as a marketdominant product. Upon clearance through the Postal Service International Bulk Mail Center or International Service Center (ISC) and U.S. Customs, this inbound mail is processed, transported and delivered to its U.S. state or territorial delivery address in the same manner as domestic Parcel Post. Accordingly, the service standard day ranges and business rules for Inbound Surface Parcel Post (at UPU rates) established below in 39 CFR 121.4(a)(6) are the same as for domestic Parcel Post or other Package Services mail from the 3digit ZIP Code area of the International Bulk Mail Center or ISC to the 3 digit ZIP Code of the delivery address.

C. International Market Dominant Special Services

At 72 FR 58964, the Postal Service explained why the establishment of a service standard for certain domestic marketdominant special services would be unnecessary, redundant or infeasible. The same logic holds for most of the international special services designated by the PRC as marketdominant at 72 FR 63699700. It should be noted that certain international ancillary special services can be used with both marketdominant and competitive mail. The following discussion relates solely to international ancillary services used with marketdominant mail. Under the circumstances, the Postal Service interprets 39 U.S.C. 3691(a) as not requiring the establishment of service standards for the following international special services, based upon their present characteristics.

1. International Certificate of Mailing

At 72 FR 58964, the Postal Service explained the basis for not proposing a service standard for the completion of the issuance of Certificate of Mailing for domestic mail. The same reasoning applies to an International Certificate of Mailing purchased in connection with outbound international mail. The international certificate is provided to the sender by the Postal Service as an intrinsic element of the acceptance of the mailpiece for which it is purchased. The purchase of the certificate is ancillary to sending an Outbound SinglePiece First Class Mail International letter, flat or parcel, and does not affect the service standards otherwise applicable to the transit of those pieces from their domestic points of origin to their designated International Service Centers. Provision of the certificate at the time of mailing at acceptance completes the special service. Accordingly, the Postal Service sees no means or need for a standard measuring the timely completion of the provision of International Certificate of Mailing service.

2. International Registered Mail

International Registry service provides added security for a mailpiece from acceptance to delivery, and indemnity in case of loss or damage in transit. This ancillary service, however, does not affect the intransit service standard of a mailpiece for which it is purchased. Thus, from its origin to its designated International Service Center, Registered Outbound SinglePiece FirstClass Mail International is subject to the same service standard as that same mail without Registry service. Likewise, from its designated International Service Center to its delivery by the Postal Service, Registered Inbound SinglePiece FirstClass Mail International is subject to the same service standard as that same mail without Registry service. Accordingly, as with domestic marketdominant mail for which Registry service is purchased, the Postal Service has determined that there is no need to establish a separate service standard for the transit of International Registered Mail in the U.S. postal system.

At 72 FR 5896162, the Postal Service proposed a 24hour service standard for online availability of domestic marketdominant product Registered Mail delivery scan data at http://www.usps.com. The Postal Service performs the same scanning in relation to the delivery of inbound international mail for which the sender has purchased Registry service from a foreign postal administration. Accordingly, for inbound international Registered Mail, the Postal Service is establishing the same 24hour standard for the availability of delivery scan data.

The Postal Service does not offer a tracking feature for Outbound SinglePiece FirstClass Mail International. On this basis, the Postal Service finds it infeasible at this time to establish the same delivery scan data availability for these items.

3. International Return Receipt

When international outbound or inbound hardcopy Return Receipts, which have been signed upon delivery, are in transit for any portion of their journey in the Postal Service mailstream, they travel though the U.S. postal network as FirstClass Mail cards, subject to the same processing and delivery standards as other SinglePiece FirstClass Mail International. Therefore, outbound international Return Receipts would have the same service standards as Outbound SinglePiece First Class Mail International; and inbound international Return Receipts would have the same service standards as Inbound SinglePiece First Class Mail International. The Postal Service explained why no independent service standards should be developed for the hardcopy Return Receipt portion of the domestic FirstClass Mail. 72 FR 58964. Because hardcopy International Return Receipts are processed along with other Outbound and Inbound SinglePiece FirstClass Mail International, the same logic applies to justify a determination that independent service standards need not be established for hardcopy International Return Receipts.

At 72 FR 58963, the Postal Service explained the basis for its proposed establishment of a service standard for domestic electronic Return Receipt service in 39 CFR 122.1(a)(1), as reflected at 72 FR 58970. That standard is based upon the Postal Service's ability to scan mailpieces during the delivery process and upload delivery information to its website for access by the sender. However, there is no equivalent electronic International Return Receipt service offering. Accordingly, there is no basis for establishing an international equivalent service standard.

4. International Restricted Delivery

Like its domestic counterpart, International Restricted Delivery service is purchased subject to the explicit understanding that the requested delivery restriction is subject to availability. See 72 FR 58964. At the time when Restricted Delivery service is purchased from the Postal Service for Outbound SinglePiece FirstClass Mail, it cannot be known whether some delivery policy exception or limitation applicable to the delivery address in the jurisdiction of the destination foreign postal administration overrides the requested delivery restriction. Likewise,
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if the service is purchased from a foreign postal administration on inbound international mail, it cannot be known whether some Postal Service delivery policy exception may override the requested delivery restriction. Accordingly, as is the case with domestic Restricted Delivery service, the establishment of service standards for international Restricted Delivery service is unwarranted.

5. International Reply Coupon

International Reply Coupon service (outbound and inbound) allows the sender to prepay a reply by purchasing reply coupons that are exchangeable for postage stamps by postal administrations in member countries of the Universal Postal Union. One coupon is exchangeable for a stamp or stamps representing the member country's minimum postage of an unregistered letter. Because the transaction is complete at the time of purchase of the coupon for outbound and at the time of redemption of the coupon for inbound, and no additional service is required, the Postal Service sees no means or need for a standard measuring the timely completion of this service. If mail for which the postage has been paid by means of an International Reply Coupon is processed by the Postal Service as an inbound or outbound marketdominant product, the postage payment method does not affect the service standard otherwise applicable to the transit of that mail.

6. International Business Reply Mail

International Business Reply Mail service is an alternate postage payment method established for highvolume mail recipients who assume responsibility for the payment of postage on specially preprinted mailpieces that are delivered to them. It is similar to domestic Business Reply Mail in that the postage payment method does not affect the transit of such mail from its origin to its destination. From its point of entry into the United States Postal Service mailstream at an International Service Center (ISC) until it is delivered, inbound International Business Reply Mail has the same service standards as a comparable international mailpiece for which the postage is prepaid. As there is no justification for establishing independent service standards for domestic Business Reply Mail beyond those for domestic FirstClass Mail,\4\ there also is no need to establish a separate service standard for international mail for which the Business Reply Mail postage payment method is employed.
\4\ See 72 FR 58964.
III. Service Standard Proposals or Amendments Resulting From Subsequent Postal Service Administrative Determinations

After publication of its October 17, 2007, Federal Register notice, the Postal Service continued to review the feasibility of its proposed service standards regulations. As explained below, the Postal Service has unilaterally determined that some substantive revisions to its proposed regulations are appropriate. The Postal Service also has made minor organizational changes or clarifications to the wording of the regulations.
A. Substantive Changes to Proposed Service Standards for NonContiguous States and Territories

1. The Alaska 995 IntraSCF FirstClass Mail Overnight Split

As reflected in proposed 39 CFR 121.1, the Postal Service originally proposed that intraSectional Facility (SCF) FirstClass Mail for all 3digit ZIP Code areas of the state of Alaska would have a 2day service standard, with the exception of the 995 3digit ZIP Code area, which would have an overnight standard. See 72 FR 58967. Further review has led the Postal Service to modify this proposal and retain a 2day FirstClass Mail standard for part of the 995 3digit ZIP Code area.

To an extreme degree, the population and logistical infrastructure of the 995 3digit ZIP Code intraSCF area in the state of Alaska are heavily concentrated in the subordinate 5digit ZIP Code service areas that include the city of Anchorage. An overnight service standard for all intraSCF FirstClass Mail in the 995 3digit ZIP Code area would require the Postal Service to undertake extraordinary logistical obligations for the intraSCF volume that is not either to or from the city of Anchorage, in order to meet that standard in every isolated corner of a vast service area in which roads and pockets of population often do not coexist. For these reasons, 39 CFR 121.1(a) now reflects an operational split of the 995 3digit ZIP Code service area that preserves the overnight standard where the intraSCF mail is concentrated.

2. Reductions in other proposed day ranges.

A comparison of the service standard day ranges originally proposed for origindestination 3digit ZIP Code pairs that include the states of Alaska or Hawaii, or the territories of Guam, Puerto Rico, or the U.S. Virgin Islands to the day ranges established today reveals that the Postal Service has reduced some service standard day ranges.\5\ These reductions result from additional refinements in logistical mapping for mail to and from these origins and destinations. \5\ Compare the tables at 72 FR 5859192 to 39 CFR part 121, Appendix A below in section IV.E.
B. Inclusion of a Service Standard for Money Order Inquiry Service

Money Order Inquiry service is important to postal customers seeking to determine whether money orders they have purchased from the Postal Service have been cashed. Subsequent to the purchase of a money order, customers may complete an inquiry form and pay the appropriate fee. At a centralized processing center, data from each form are computerized and transmitted to the inquiry data system. There, they are matched by the Postal Service against electronic banking transaction records obtained from the Federal Reserve System in order to determine whether the money order has been cashed and to provide the customer with a status report on the money order. Correspondence is sent to the customer with the status of the money order. If the money order has been cashed, a copy of the record of the banking transaction is included. As a modern service standard, the Postal Service proposes that the response to a Money Order Inquiry should be transmitted from its electronic inquiry system and dispatched no later than 15 business days (excluding designated postal holidays) after the date on which the Postal Service accepts the completed inquiry form and payment from the customer.
C. Additional Postal Designation of MarketDominant Products

Since the publication of its October 17, 2007, Federal Register notice, the Postal Service has proposed that the following two international special services also be designated as marketdominant, when used with marketdominant mail: Inbound International Insurance, and Customs Clearance and Delivery. PRC Docket No. RM20071, United States Postal Service Submission of Additional Mail Classification Schedule Information in Response to Order No. 43 (November 20, 2007). 1. Inbound International Surface Parcel Insurance Claims

Inbound International Insurance is available for Inbound Surface Parcels tendered at Universal Postal Union
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rates. Purchase of this ancillary service for such parcels does not affect their transit in the U.S. mailstream. Accordingly, there is no need to establish intransit service standards for Insured Inbound International Surface Parcels that are independent of the standards for uninsured pieces discussed above in section II.B.

Under current Universal Postal Union procedures, an inquiry must be filed prior to any claims processing. The Universal Postal Union establishes time limits for inquiry and claims processing, but compliance with these time limits depends upon the exchange of information between postal administrations. The number of insured Inbound Surface Parcels at UPU rates is relatively small. The Postal Service has no control over the claims processing and information exchange response times of foreign posts, which vary. Therefore, under present circumstances, the Postal Service does not believe it feasible to establish an independent service standard for inbound international insurance claims processing.

2. Customs Clearance and Delivery Fee

This service consists of the Postal Service collecting a fee from the recipient on each inbound package on which a customs duty or Internal Revenue Service tax is assessed. The Postal Service fee is accounted for by affixing postagedue stamps to the packages or to a postagedue bill and canceling. From the ISC or exchange office to the delivery unit, such mail has the same transit as other inbound international mail. Accordingly, there is no basis for establishing a separate service standard from the ISC or exchange office for the transit of pieces on which the Postal Service collects these fees or taxes. The fee or tax collection transaction at delivery is similar to the transactions at delivery that result in Collect on Delivery payment. Once the duty or tax is collected, no further service is required of the Postal Service. The Postal Service thus does not see any means or need for a standard measuring the speed with which the fee or tax is collected.

D. Minor Changes and Clarifications

As originally proposed, the Postal Service's regulations divided the mail products and the special services products into parts 121 and 122, respectively. Within part 121, all domestic products were addressed sequentially, followed by international mail. However, in the concurrent rulemaking through which the Postal Mail Classification Schedule is being reorganized, marketdominant domestic and international FirstClass Mail products are grouped together, as are the marketdominant domestic and international Parcel Post products. See 72 FR 63699. To conform to the organization of the Mail Classification Schedule, proposed Sec. 121.5, which addressed Outbound SinglePiece FirstClass Mail International, is being eliminated. Instead, the service standards for Outbound and Inbound SinglePiece FirstClass Mail International, respectively, are now included as subsections (f) and (g) of Sec. 121.1, FirstClass Mail. Likewise, a new subpart (c) is being added to Sec. 121.4, to address the PRC's recent designation of Inbound Surface Parcel Post (at UPU rates) as a marketdominant product.

The Postal Service also is making clarifying changes in wording that are not prompted by the PRC's recent marketdominant product designations, nor the comments submitted in response to its October 17, 2007, Federal Register notice. As an example, the service standard for the resolution of domestic Insurance Claims in proposed 39 CFR 122.1(b) is that the final agency decision be transmitted no later than 30 days after the claim is deemed to be complete. See 72 FR 58970. The Postal Service is amending that section to specify that the standard is 30 calendar days. This clarification is made to avoid any misunderstanding that may result from the establishment of the 15 business day standard applicable to Money Order Inquiry service in 39 CFR 122.2(d). To further minimize any misunderstanding, the service standard for Address List Services in 39 CFR 122.2(b) is being amended to incorporate the use of the term business day instead of workday, with the understanding that Mondays through Fridays are counted as business days, excluding designated postal holidays.

IV. Comments

The Postal Service received comments from 27 sources in response to its October 17, 2007 solicitation. They came from an individual mailer, commercial mail advertisers and printers, periodicals publishers and mailers, parcel shippers, nonprofit mailers, users of various postal special services, mailer trade associations, the Postal Regulatory Commission, and a United States Senator. Many of the comments expressed appreciation for the Postal Service's outreach process and its consideration of the various mailer proposals and concerns communicated during the comprehensive review of marketdominant product service standards that led to the publication of its October 17, 2007, Federal Register notice.\6\ The Postal Service, likewise, expresses its gratitude here to all who took the time and effort to constructively express their views and concerns, both before and in response to the Federal Register notice.
\6\ See 72 FR 58946 et seq. The Postal Service's customer outreach efforts are summarized at 72 FR 5894758948.

The Postal Service has carefully considered all of the aforementioned comments. As will be demonstrated below, in some instances these comments have resulted in amendments, clarifications or corrections to the proposed regulations. Below, the Postal Service summarizes and discusses a number of the comments.

Clarification of Terminology. One commenter sought an explanation of the term ``properly accepted,'' as used in the proposed regulations. The term is intended to refer to properly addressed mail that meets the requirements for acceptance at the time that the Postal Service either assumes custody or control of it from the mailer (i.e., at a postal bulk mail entry unit) before the applicable Critical Entry Time, or, where permitted, when it is dropped in an authorized depository (i.e., street corner collection box) before the posted daily last pickup time.

Annual Review Process. At 72 FR 58967, the Postal Service indicated its intention to place a high priority on annual internal review of its marketdominant product service standard day ranges and business rules. There, the Postal Service indicated that it would use its discretion to determine if, when and how it might solicit public input as a part of such internal review. A number of commenters responded to the Postal Service's October 17, 2007, solicitation by requesting that the Postal Service commit to the establishment of formal procedures that would ensure mailer input during each annual service standard review process.

The Postal Service greatly values customer input, and routinely solicits information through a variety of venues, including, but not limited to, mailer industry workgroups, customer surveys, and market research. Additionally, solicited or otherwise, postal customer service and operations managers routinely receive numerous comments that originate from marketdominant product mail senders and receivers, and users of special services, regarding their experiences and expectations. The Postal Service is committed to the review of such information during its
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internal service standards review process. However, the Postal Service intends to reserve the right to exercise its discretion on a caseby case basis in determining if, how, and when to engage in either an informal dialogue with some customers or a formal solicitation of comments from all customers as part of that annual internal review process.

Of course, when the Postal Service plans to pursue implementation of a change in a postal service that is at least substantially nationwide in scope, it will request an advisory opinion from the PRC under 39 U.S.C. 3661. In proceedings conducted under that section, the public is permitted to intervene, to request a hearing, to conduct discovery, and to file comments and testimony.

Concerns about the Downgrading of Service. A large number of comments suggested that the proposed new service standards downgraded service in comparison to that received under the current standards. Some of these comments requested that the Postal Service continue to maintain the current standard where the expected number of days is less than what is proposed in the new service standards.

The proposed modern service standards reflect the Postal Service's careful consideration and balancing of a number of important factors, which included customer wants and needs. The customer outreach conducted during the development of the modern service standards revealed that customers wanted standards that are reliable, consistent, realistic, and attainable, and that any proposed changes reflect sensitivity to the impact of increased postal costs on the rates that they pay.

Current service standards for Periodicals, Standard Mail, and Package Services are based primarily on mail processing technology, transportation availability, and logistical assumptions of the early 1970s, mapped to destination zones based on rudimentary ``great circle mile'' determinations; FirstClass Mail standards are based on mail transportation availability and logistical planning tools that existed in the early 1990s. These standards reflect implementing criteria or ``business rules'' \7\ that, to a very significant degree, are based upon mailing practices and postal operational and costing
considerations that no longer reflect current realities. For some marketdominant products, even in the absence of any comprehensive system of service performance measurement, it is undisputed that the current standards create customer expectations that have long ceased to be consistent with the manner in which mail is being processed and transported between many origindestination 3digit ZIP Code pairs. \7\ Business rules are the implementing criteria which determine the number of daystodelivery between each of the approximately 851,000 origindestination 3digit ZIP Code pair combinations in the postal network for each marketdominant mail class.

To develop modern service standards, the Postal Service carefully studied such factors as presentday mail transportation availability, actual highway mileage between facilities, and changes in mail entry practices and mailflows that reflect current mail processing facility functions, technology, economies and capabilities. A painstaking and comprehensive review process reasonably matched operational capabilities across the entire postal network with the wants and needs of the greatest number of postal customers. As is to be expected, in some cases, this resulted in different service standards than previously existed. The claim of one commenter that service standards have been lowered solely or primarily to save costs is without foundation.

Another commenter suggested that the outer limit of service standards for Periodicals within the contiguous 48 states could be reduced from 9 to 7 days if other methods of transportation and more expedited mail dispatch protocols were implemented. More expeditious service standards tend to be more favorably received by mailers than standards that are less expeditious. Some of the changes established by the Postal Service today will raise customer expectations, by reducing the number of days in transit for some mail between specific 3digit ZIP Code pairs. Likewise, some of the changes established today will lower customer expectations, by increasing the number of days for certain mail in transit between specific 3digit ZIP Code pairs. The Postal Service understands the appeal of preserving existing service standards that are intended to reflect the availability of faster service. And, the Postal Service was cognizant of the current service standards as it contemplated making comprehensive, modernizing changes. However, the Postal Service also had to consider the impact that the wholesale preservation of ``faster'' standards for particular 3digit ZIP Code pairsin effect, the ``grandfathering in'' of service standard day ranges and business rules adopted on the basis of criteria that are no longer usefulwould have on its ability to fulfill the mandate that it achieve the objectives of subsection (b)(1) and consider the factors of subsection (c) of 39 U.S.C. 3691.

The Postal Service is confident that its modern business rules and resultant service standard day ranges more accurately reflect current network capability and reasonably respond to the needs of all postal customers, even if it is impossible to satisfy each customer.

Concerns About Service Consistency/``Tail of the Mail.'' Several commenters requested the establishment of service standards for mail that reaches its destination after its published service standard (otherwise known as ``tail of the mail''). The Postal Service's modern business rules and resultant service standards day ranges have been designed to reflect realistic operational capability across the entire postal network. Under these new standards, the Postal Service expects that the number of pieces reaching destinations after the prescribed service standard will be reduced. However, there will always be a small number of pieces that are not delivered within their service standard. Rather than establish additional benchmarks for mail not meeting its standard, the Postal Service prefers that its service standards reflect one goal for all mail within a marketdominant product designation, and that the degree to which mail is late be measured and reported to the PRC. This preference is reflected on pages 25, 41, 48, and 55 of the USPS Service Performance Measurement proposal referenced in the Notice of Request for Comments on Service Performance Measurement Systems for Market Dominant Products, PRC Order No. 48, Docket No. PI20081 (December 4, 2007). As indicated in that proposal, the Postal Service plans to report data to the PRC regarding the late arrival of mail for each marketdominant mail product on a quarterly basis.

Service Standards for Caller Service. Some commenters requested that standards be established for Caller Service. Caller Service provides an alternative means of receiving properly addressed mail at a postal facility call window or loading dock. See 72 FR 58962. As explained previously, the specific details and arrangements of Caller Service are individually negotiated between the customer and postal facility and can vary greatly among mail recipients at the same facility. Id. at 58964. The Postal Service has reviewed this matter in response to the comments filed. However, that review affirms the conclusion that, given the current flexible nature of the service, the desires expressed by customers could be better fulfilled
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through individually negotiated arrangements, rather than a uniform service standard.

Service Standards for Forwarded Mail and ChangeofAddress. A number of commenters urge the establishment of service standards for mail that is forwarded to a new address for delivery. The Postal Service does not interpret 39 U.S.C. 3691 as requiring the establishment of standards for the completion of the numerous discrete operational functions associated with the transmission of mail within a particular marketdominant product designation from its origin to its destination. Accordingly, the Postal Service does not consider utilization of specific mail processing operations in forwarding marketdominant mail to constitute a distinct marketdominant product for which section 3691 requires consideration of the establishment of a service standard.\8\
\8\ This is not to suggest that the Postal Service is averse to capturing additional operational data that would help it to better monitor its ability to efficiently and expeditiously forward and/or return undeliverableasaddressed mail.

That being said, the Postal Service's longstanding operational goal is for forwarded mail to travel from its intercept point in the mailstream to the new address in accordance with the service standard applicable from that intercept point's 3digit ZIP Code area to the 3 digit ZIP Code area of the new delivery address. The Postal Service has long recognized the importance of reducing the volume of undeliverable asaddressed mail that it processes. For that reason, the Postal Service has expended considerable resources over several decades to improve mail recipient access to changeofaddress tools. At the same time, it also has invested even greater resources in a variety of mailer address quality improvement programs, and provided bulk mailers with resources and incentives to reduce the volume of undeliverableas addressed mail that needs to be forwarded. Several tools and products are available to mailers to correct addresses or barcodes, and to update mailing lists that contain addresses of mail recipients who have moved. To improve address list quality, the Postal Service is upgrading Coding Accuracy Support System certification requirements. Customers can then correct nonmatching addresses using Address Element Correction software. More frequent mailing list updates by bulk mailers is a vital component of any program to reduce undeliverable mail and the need for forwarding. New postal MoveUpdate policies requiring mailers to update customer information within 95 days of mailing will be effective for all classes of mail in November 2008.

Once mail is in the postal system, new processes are available with the implementation of the Intelligent Mail[supreg] barcode, such as OneCode ACS ^TM, to provide efficient feedback to mailers regarding their undeliverable or forwarded mail, so that addresses can be corrected before the next mailing. Current innovative pricing for this electronic service encourages mailers to use Address Correction Service to improve the quality of their mailing lists, which can result in more effective mailings and less forwarded mail. These initiatives can improve automation performance, and will drive important changes in list management practices to increase address quality and reduce forwarded mail.

On a networkwide basis, the Postal Service has recently deployed its Postal Automated Redirection System (PARS) technology, which can automatically intercept mailpieces addressed to recipients who have filed changeofaddress information, and cause those pieces to be forwarded midstream to the recipient's new address. This should expedite the forwarding process, reduce the percentage of mail that reaches the original delivery unit before being forwarded, and reduce forwarding costs. The PARS infrastructure has also enabled more efficient processing of changeofaddress forms submitted by customers. With nationwide deployment of the ChangeofAddress Forms Processing System (CFPS), all changeofaddress forms are now scanned through the CFPS and the images sent to three remote encoding centers for automated processing. PARS has automated the laborintensive Address Change Service process. Now images are electronically sent to the National Customer Service Center where more than 360,000 address change notification cards are printed daily. To achieve more accurate and faster processing of address change service requests, customers are encouraged to use electronic changeofaddress procedures that validate address data at the time it is entered.

Notwithstanding the potential benefits of these programs and technologies, the Postal Service and mailers must work together more aggressively to improve address hygiene and reduce the volume of forwarded mail resulting from an increasingly mobile society. The volume of mail that requires forwarding is significant, as are the associated costs. And, under the new price cap ratemaking regime, reducing these volumes and costs will become an even more important matter of mutual interest for the Postal Service and mailers. Accordingly, there is more incentive than ever for the Postal Service and its customers to work together to drive the volume and costs of forwarded mail downward. The Postal Service looks forward to an even greater level of cooperation from those who bear the costs of this mail. The Postal Service will also continue to devote resources to reducing transit times for mail subject to forwarding.

Requests for Different Standards Within a Class. Some commenters proposed the establishment of distinct service standards for different types of mail within existing marketdominant classes: For example, remittance mail, as distinguished from other FirstClass Mail; parcels, as distinguished from flats, within Standard Mail; or incounty Periodicals, as distinguished from outsidecounty Periodicals. Still other commenters proposed that mailpieces of the same shape, but in different classes (Standard Mail vs. Package Services) be assigned the same service standards, even if that results in different service standards within a mixedshape class.

The Postal Service does not interpret 39 U.S.C. 3691 as necessarily prohibiting the establishment of different service standards for different types of mail within a particular marketdominant class. Nevertheless, the modern service standards established below reflect a continuation of the Postal Service's preference for a consistent set of service standards within a particular class for mail with the same origindestination pattern, without additional intraclass service distinctions based on such factors as shape, content, or whether additional mail preparation is performed beyond the minimum required to qualify for a particular rate category, or to qualify for an exception to a local Critical Entry Time deadline. The comments reflect a disagreement among mailers who use the same marketdominant mail product regarding whether the Postal Service should reconsider that approach.

The Postal Service considers it important to emphasize that there are finite limits in the level of service standard differentiation that can be effectively managed on the workroom floors of a complex logistical network. Proposals seeking to establish some of the suggested intraclass service standard distinctions would require the exploration of a host of mail processing operational issues and could potentially raise threshold classification and rate issues that are beyond the scope of the exercise mandated by 39 U.S.C. 3691(a). Accordingly, such proposals are not responded to or acted upon here. [[Page 72222]]

No matter how broad or narrow some interclass service features or mailflow differences may be, mailers are expected to consider all interclass differences, including service standards, in choosing whether to pay for a more or less expensive service. Mail
classification and rate differences persist, however subtle any differences between the processing of Standard Mail flats and Bound Printed Matter flats, or the processing of Standard Mail parcels and Package Services parcels may be. Accordingly, the Postal Service is continuing the longstanding practice of applying the same standard to all mail within a particular marketdominant class, regardless of mailpiece shape, content, or preparation, and is establishing modern service standards that continue that practice.

Service Standard for DBMC Containerized Rate Periodicals. One commenter observed that the proposed Periodicals service standards did not explicitly address the standards applicable to mail which qualifies for Destination Bulk Mail Center (DBMC) containerized rates. That oversight has been corrected in the final regulations.

Availability of Delivery Scan Information. For a variety of market dominant special services, the Postal Service proposes that delivery scan data be available to customers online within 24 hours of the delivery scan. See 72 FR 58963. A few commenters requested that the standard for delivery scan data availability be reduced to less than 24 hours. A 24hour service standard was proposed because of variations in time zones and their impact on scanning, and data uploading and availability.

Standard Mail Service Standard Day Ranges and ``InHome'' Delivery Days.

Some comments reflect concern that the proposed service standards for Standard Mail are too broad. For example, one commenter observes that, under the proposed modern standards, mail that receives a destination entry discount and is dropped at a destination BMC could have a service standard of up to 5 days. For the sake of clarity, the Postal Service emphasizes that the proposed standard for such mail is not ``up to'' 5 days, but exactly five days, taking into account the deferrable nature of such mail.

Standard Mail users wishing to more specifically influence the exact date on which such mail is delivered routinely request that the Postal Service honor specific ``inhome'' delivery days or ``inhome'' delivery day ranges, regardless of the applicable standard. Local postal mail processing and delivery managers do attempt to honor requested ``inhome'' dates, but only as local mail processing and delivery plans permit. Several commenters requested that, as an alternative to its longstanding ``dayspecific'' targets (such as, ``4 days'' or ``5 days'') the Postal Service adopt Standard Mail ``day range'' service standard targets (such as, ``3to5 days'' or ``4to6 days'').

Such proposals are not being adopted here. They raise a variety of complicated postal mail processing and delivery issues, not to mention considerations of service performance measurement and accountability. Whether or not any differences among mailers or between mailers and the Postal Service on these issues are reconcilable requires further dialogue. In advance of the publication of its October 17, 2007, Federal Register notice, the Postal Service indicated that it was willing to engage with a mailing industry working group for that purpose. That willingness has not abated. Through appropriate media, the Postal Service will organize such an undertaking.

Seasonal Adjustments for DestinationEntered Standard Mail Pieces. A few commenters requested seasonal adjustments in the service standards for destinationentered Standard Mail pieces. The Postal Service acknowledges that there are significant challenges inherent in trying to maintain high service levels when mail volumes surge, typically from the months of September to December. Nevertheless, the Postal Service continues to be persuaded that it is better to manage its operations on the basis of a consistent, yearround set of service standards, rather than to temporarily vary those service standards at different times of the year. A consistent standard helps to reinforce the applicable goal among all postal managers and employees engaged in processing, transportation and delivery. The transitioning of operational performance from one set of standards to another could result in less consistent service than desired. Accordingly, the Postal Service intends to preserve the longstanding practice, reflected in its proposed regulations, of maintaining yearround service standards. As indicated at 72 FR 58966, the Postal Service considers that seasonal adjustments of performance goals would seem to be more appropriate for consideration, in the context of establishing such goals under PAEA section 302, and will meet with customers to further discuss this issue.

Service Standards by Specific 3Digit ZIP Code. Some commenters requested that service standards applicable to parcels, whether they be Package Services or Standard Mail pieces, differ by specific 3digit ZIP Code. Such proposals are not being adopted here, as this type of customization runs contrary to the application of standardized business rules to calculate consistent service standards.

Service Standards to NonContiguous States and Territories. Several commenters expressed concern about the proposed service standards for mail to and from states and territories beyond the contiguous 48 states.

One commenter appears to express the concern that the proposed service standards for mail moving to and from noncontiguous states and territories reflects a lesser effort on the part of the Postal Service to procure transportation to move that mail than for mail in the 48 contiguous states. To the contrary, mail to and from the noncontiguous states and territories reflect the stark differences between the availability of economical resources for the movement of mail to and from the noncontiguous states and territories than for mail moving among the contiguous 48 states.

Rational operating plans that take into account the numerous logistical variables beyond the Postal Service's control will result in unavoidable differences between levels of service. In the contiguous states, the next truck is often available in a matter of hours. To and from the noncontiguous states and territories, the next appropriate cargo ship may not be available for several days or even a week. The establishment of longer service standard day ranges for mail to and from the noncontiguous states and territories reflects an attempt to better match the service standards to the operational realities of surface and air transportation.

The same commenter expressed recognition of the challenges faced by the Postal Service, sometimes the carrier of only resort, in providing economical service beyond the contiguous 48 states. The Postal Service appreciates that recognition and is committed to using its annual internal service standards review process, as circumstances warrant, to explore opportunities to economically improve its use of available transportation to minimize service standard day ranges for mail to, from and within the noncontiguous states and territories.

The commenter also expressed concern that the service standards for mail between the contiguous 48 states and the separate destinations of the state of Hawaii and the territory of Guam appear to be aggregated in a manner that has the result of substantially increasing the time in transit between Hawaii and the contiguous states. To the contrary, the standards for mail between the
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contiguous 48 states and Guam (through Hawaii) are longer than the standards between Hawaii and the contiguous 48 states. In this area, the Postal Service opted for arguably overaggressive standards between the contiguous 48 states and Guam to ensure a higher level of urgency in the handling of such mail than might be the case if a longer standard were established.

The commenter also astutely observes several inadvertent omissions of references to the territory of Guam in the table at 72 FR 58591. A corrected table is being incorporated into the final service standard regulations.

Critical Entry Times (CETs). A Critical Entry Time is the latest time a particular type of mail can be accepted by the Postal Service in order for it to undergo the processing and/or dispatch in downstream operations necessary for delivery within the service standard for that mail. This is more of a measurement issue than a standards issue, for the CET affects the start time for performance, not the length of the standard itself.

Several commenters requested information on how local changes in CETs would be communicated to the mailer; how mailers can access CET data; how CETs are established; and how the Postal Service takes customer needs into account in said establishment. Commenters also expressed their opinions on how CETs should be set. The Postal Service is currently meeting with customers to discuss these and other issues, and is committed to developing a communications process.

P.O. Box\TM\ Uptimes. As indicated in proposed 39 CFR 122.2, the proposed service standard for P.O. Box service is that mail be available for pickup no later than the daily ``uptime'' publicly posted at corresponding Post Office locations. See 72 FR 58970. One commenter requests that the proposed service standard regulation be amended to explain how ``uptimes'' are determined. As explained in the original Federal Register notice, ``uptimes'' are determined on the basis of local mail processing plans and standard operating procedures. See 72 FR 58963. It is not reasonable to expect the service standard regulations to contain details of mail acceptance, processing and delivery operations, or the criteria that determine their application.

Standards for the Improvement of Retail Access. A few commenters propose the establishment of service standards for certain aspects of postal transactions related to the entry of mail into the postal system, such as the acquisition of postage, calculation of correct postage for a given piece, the location and number of collection boxes and the last collection time of these boxes, and for time spent by customers waiting in line or otherwise waiting for window service at Post Office locations.

The Postal Service strives to enhance retail access by providing prompt, efficient and economical service in a variety of ways. For example, to maximize the availability of postal window personnel for more complicated transactions or for the acceptance of accountable mail pieces, the Postal Service offers its customers alternative outlets for postage purchase transactions (by mail, phone or online at http://www.usps.com, via Automated Postal Centers in Post Office lobbies, and through nonpostal commercial retail outlets). A wealth of retail customer service information also is available through http://www.usps.com and the Postal Service will continue to educate customers to take advantage of that resource.

Purchasing postage stamps, philatelic items, or money orders, or requesting information from a knowledgeable window clerk, submitting a passport application, or waiting in line at a Post Office\TM\ locationin and of themselvesdo not constitute marketdominant products for which the Postal Service is required to consider establishment of a service standard under 39 U.S.C. 3691. Accordingly, no nationwide standards are being established as a part of this rulemaking.

The Postal Service will continue to invest resources in the management, optimal deployment, and training of its personnel, as well as the accessibility of information online, so as to minimize the length of time that customers spend in line at Post Office locations and to enhance general retail access. The Postal Service will continue to analyze customer comments and market research performed for the purpose of assessing and improving its customers' postal transaction experiences.

In the same vein, in response to another commenter, the Postal Service also recognizes that local compliance with policies regarding the last pickup times for collection boxes maximizes the ability of household and small business customers to enter mail in a manner that gives it the best chance of being delivered within the applicable origindestination service standard. The Postal Service takes customers concerns about such compliance seriously and will continue to monitor compliance with applicable operational policies.

The Postal Service observes that section PAEA 302(d)(2) requires it to consult with the PRC and submit to Congress within six months from today a plan regarding the expansion and marketing of retail access to postal services. The Postal Service looks forward to those consultations and the development of that plan. However, such matters are beyond the scope of this rulemaking.

Other Comments. While many of the comments addressed the substance of the proposed service standard regulations, others discussed matters that the Postal Service deems to be outside the scope of the proposed regulations, even if related to other aspects of sections 301 and 302 of the PAEA generally. Such matters included the communication of the new standards (such as requests to publish the service standards on the Postal Service's public Web site, http://www.usps.com); service performance measurement, service performance goals, and reporting; and specific product requests and inquiries (such as a request that Delivery Confirmation\TM\ service be included on every parcel for no additional charge, a request for a change in handling hardcopy Return Receipts, the purpose of taggant ink on Certified Mail\TM\, and the proposed development of a CONFIRM[supreg] service system that alerts customers to system issues). Although these issues are not within the scope of the establishment of service standard regulations, all of these matters are important to the Postal Service. The Postal Service's decision not to acknowledge and or respond to a specific comment, or incorporate any particular suggestion into its service standard regulations, or to respond specifically to each such comment here should only be interpreted as a judgment that such matters are beyond the scope of its October 17, 2007 Federal Register solicitation and the task of establishing modern service standard regulations. This is not to imply that the abovereferenced suggestions or inquiries lack merit, or that they are not currently being acted upon or will be acted upon.

As indicated earlier, the full extent of any realignment of the postal mail processing and transportation network to achieve these standards cannot be known until the Postal Service, after consultation with the PRC, submits to Congress no later than 6 months from today its performance goals and the facilities plan required by PAEA section 302. Thus, there will be a lag between the establishment of these service standards and implementation of related operational changes that may be necessary to support them. In the meantime, the Postal Service is exploring numerous options regarding
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the hardcopy and electronic publication and dissemination of information regarding the service standards established today.

In conjunction with its October 17, 2007, Federal Register notice, the Postal Service made available online an electronic file detailing the modern service standards originally proposed for each origin destination 3digit ZIP Code pair for FirstClass Mail, Periodicals, Standard Mail and Package Services. As a first step in the dissemination of information about the modern service standards established today, the Postal Service has created an updated version of that electronic file based on the service standard day ranges and business rules changes adopted today. The file is now accessible online at http://ribbs.usps.gov/modernservicestandards. V. The Proposed Modern Service Standards Reflect Consideration of Relevant Statutory Objectives and Factors

A. The Statutory Objectives

In establishing modern marketdominant product service standards, the Postal Service is directed by 39 U.S.C. 3691(b)(1) to:
Enhance the value of postal services to both senders and recipients; Preserve regular and effective access to postal services in all communities including those in rural areas or where Post Offices are not selfsustaining; and
Reasonably assure Postal Service customers delivery reliability, speed and frequency consistent with reasonable rates and best business practices.
120 Stat. 3218. Careful consideration was given to these objectives in the establishment of the service standard proposals listed below, as demonstrated in 72 FR 5896458965.

39 U.S.C. 3691(b) requires that marketdominant product service standard performance be measured by some objective external system, or by internal methods approved by the PRC under 39 U.S.C. 3691(b)(2). As indicated above, the Postal Service has submitted a plan for service performance measurement to the PRC for review. On December 4, 2007, the PRC initiated an administrative public inquiry docket for the purpose of soliciting comment on the details of that plan and declared its intent to publish a corresponding Federal Register notice.

B. The Statutory Factors

As demonstrated at 72 FR 5896567, the marketdominant product modern service standards proposed on October 17, 2007, reflect thorough consideration of the enumerated factors in subsection 3691(c): (1) The actual level of service that Postal Service customers receive under any service guidelines previously established by the Postal Service or service standards established under this section; (2) The degree of customer satisfaction with Postal Service performance in the acceptance, processing, and delivery of mail; (3) The needs of Postal Service customers, including those with physical impairments;
(4) Mail volume and revenues projected for future years; (5) The projected growth in the number of addresses the Postal Service will be required to serve in future years;
(6) The current and projected future cost of serving Postal Service customers;
(7) The effect of changes in technology, demographics, and population distribution on the efficient and reliable operation of the Postal Service delivery system; and
(8) The policies of this title and such other factors as the Postal Service determines appropriate.

120 Stat. 321819. Although exempt by 39 U.S.C. 410(a) from the notice and comment requirements of the Administrative Procedure Act (5 U.S.C. 553(b) and (c)) regarding proposed rulemaking, the Postal Service invited public comments on its proposed regulations. The Postal Service carefully reviewed each party's comments in determining whether to deviate from its proposed regulations and in establishing service standards for the marketdominant products discussed above that were not addressed in its October 17, 2007 Federal Register notice. The comments reflected many thoughtful observations and some have resulted in changes and improvements to the originally proposed regulations, which are reflected below.

In addition to reviewing these comments, the Postal Service also reexamined the aforementioned statutory factors, with an emphasis on customer satisfaction and customer needs. These factors were influential in the Postal Service's determination to adjust some of its proposed service standards.

C. Format of Final Regulations

In its October 17, 2007 Federal Register notice, the Postal Service included two sets of tables that were intended to serve as graphic representations of the regulations proposed in 39 CFR Parts 121 and 122. The first set of tables on 72 FR 5895052 depicted the proposed service standard day ranges for each of the following: FirstClass Mail, Periodicals, Standard Mail and Package Services. The second set of tables summarized the corresponding business rules for those standards, and the service standards for special services that were being proposed. See 72 FR 5895361.

As indicated above in section IV, the Postal Service is adopting the suggestion that the first set of tables be incorporated into the final service standard regulations published in the

FOR FURTHER INFORMATION CONTACT Jeffrey C. Williamson, Manager, Network Development and Support, United States Postal Service, 475 L'Enfant Plaza, SW., Washington, DC 20260, tel: 2022682065, email:
service.standards1@usps.gov.